Question

Kayla Tyler sells carpets for $650 each. She purchases each carpet for $140 and spends $56,000 for fixed costs. Answer the two separate scenarios.
Round your answers to the nearest whole number.

a) Calculate operating income if Kayla sells 470 carpets
Operating Income: 183700 ( I got that)

b) Calculate the revenues needed to obtain an operating income of $44,000.

Answer 1

As you're asking for 2nd part only I'm doing that. For this qe have to do back calculation that is we have to start from operating income then add other costs to it to reach revenue.

Contribution per unit = $650-$140=$510

Operating income. $44,000

add fixed cost $56,000

Contribution. $100,000

No of Units to sell $100,000/$510

196.078 or 196 units (approx)

Sale price per unit. $650

Total sale value $127,450(aprox)

For checking answer if we do $127,450*510/650 we will get contribution of $100,000.

Then $100,000-$56000(fixed cost) =$44,000 profit.

But it's 196 units due to approximation because if we will do196*650 & 196*510 then we will get $99,960 & $127,000. So it's just due to approximation.